New cigarette tax, education laws take effect July 1 in Minnesota

ST. PAUL, Minn. - The new fiscal year brings a long list of new laws hitting the books. Here in Minnesota, they include a hike in the costs of cigarettes, the addition of all-day kindergarten, a break on college tuition, and many more.

All these changes are possible after lawmakers passed a more than two billion dollar tax increase and the first significant income tax increase on the wealthy in decades.

New tobacco taxes kick in Monday. That includes a $1.60 increase in the per-pack tax on cigarettes. The extra charge brings the total tax to $2.83 per pack. It's part of a state budget fix, but has also hailed by public health experts as a way to discourage smoking. Minnesota will have the nation's 6th highest tax on cigarettes. New York is tops at $4.35.

"I am not going to pay that much money to smoke. It's not good for ya anyway," said Barbara Whaley, a customer at the Smoke Shop in Robbinsdale, which saw a last minute rush of customers buying cigarettes until midnight Sunday.

Store management expects business to drop off, as many customers claim the extra cost will force them to kick the habit.

"They say this is the last time I will ever see you again. And they are also making the big switch to electronic cigarettes," said Ashraf Abuhadid, the Smoke Shop store manager.

As part of the tax conversion, retailers must take inventory on packs already in stores. By mid-July they must report their counts to the state and pay a one-time floor stock tax by early September. Floor tax proceeds have been earmarked to pay debt on the new Minnesota Vikings stadium.

"A lot of them now want to wish bad luck upon the Vikings, so it's pretty surprising to me," said Abuhadid.

Minnesota's children see a big boost as the tobacco tax helps fund free, all-day kindergarten, which is available in school districts that want it.

"We are a working family, I'd have to find before and after care anyways so for us, it makes sense to put our kids in all day kindergarten," said Sarah Watters, who was with two of her children at a St. Louis Park waterpark Sunday. She previously paid out of pocket for all day kindergarten for her oldest child.

"If it allows parents the choice, I am a fan of it," she said.

The state will spend an estimated $15.7 billion on K-12 education over the next two years, an increase of $485 million. What's now also state law is a two year tuition freeze for resident undergrad students in the University of Minnesota or MnSCU system, all part of a state plan to pour $2.8 billion into higher education.

"It will help us spend more time on our education which is the main reason why we are here. And really investing in our futures," said Amar Husain, a junior at the U of M.

Investments also possible because of Minnesota's new income tax law, creating a fourth tier to tax the wealthy. In addition, new laws will help fund expansion projects at the Mayo Clinic, 3M and the Mall of America.

The governor and other heads of agencies will see a boost in pay. In the first pay increase in about 15 years, the governor's pay will bump up by 3 percent in 2015 and 2016. Constitutional officers' salaries also increase by 3 percent in 2015 and 2016.

But Sunday, surveying the public, the hike bringing the most grief is still the one that hits a habit.

"I am stocking up yes, and after this, I'll quit," said Wendy Major, a smoker in Robbinsdale who spent $300 on what she calls her final cigarettes.